Home prices and mortgage rates are soaring, while the numbers of houses for sale has plunged. Is it any wonder that a record-high percentage of people believe it's a bad time to buy a house?
Nearly 70% of Americans now think that it’s a bad time to buy a house, according to a new Gallup poll conducted last month. This is the first time in the 44 years that Gallup has been collecting such data that a majority of people are pessimistic about buying a home. And the sentiment represents a huge majority at that.
Just 30% of Americans think now is a good time to buy, versus 53% a year ago. For the sake of comparison, in 2003, which was a few years prior to the housing bubble that triggered the Great Recession, 81% of Americans said it was a good time to buy a home.
High mortgage rates, higher home prices
It’s easy to see why people are souring on buying. Mortgage rates have surged past 5%, and the median list price of a home in the United States has climbed above $400,000, according to Realtor.com. As a result, the typical homebuyer’s monthly payment is $664 more expensive than it was last year, according to data from real estate brokerage Redfin.
Of course, prospective homebuyers only have to deal with those climbing costs if they can find a house at all. A surge in buyer demand over the past two years combined with supply chain delays have created a serious shortage of inventory that’s only been exacerbated by rising rates. The result is that some buyers are beginning to drop out of the market to wait until things cool down, but that doesn’t mean that prices will drop any time soon.
Sentiment for buying a home was the worst among young adults, who generally face more affordability challenges than their older counterparts. Just 25% of those between the ages of 18 and 34 said they think it’s a good time to buy a home, compared to 42% last year. A February report from Fannie Mae revealed even more striking levels of pessimism among young Americans.
“All of this points back to the current lack of affordable housing stock, as younger generations appear to be feeling it particularly acutely and…may have their homeownership aspirations delayed,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a news release at the time.
Will the real estate market ever cool off?
Most Americans (70%) also think home prices will keep rising over the next year, according to Gallup, and experts agree.
"Given the extremely low inventory, we're unlikely to see price declines” in the coming months, National Association of Realtors Chief Economist Lawrence Yun said earlier this week.
But there's one silver lining: Yun said he expects the growth in prices to slow down in the months ahead.